Bank of Ireland increases its fixed mortgage rates

Bank of Ireland is increasing its fixed mortgage rates. It comes after the ECB has raised its rates by 2% over the past few months.

The move follows recent rate hikes from AIB and smaller lenders such as ICS Mortgages and Finance Ireland in recent weeks.

What's changing?

Bank of Ireland is increasing all its fixed rates for NEW customers by 0.25% from today. 

So for example its popular five-year fixed rate for first-time buyers borrowing over €250,000 will go up from 2.50% to 2.75%. And its cheapest rate - a four-year 'green' rate of 1.90% - which was also the cheapest rate on the market - is now 2.15%.   

However, for the moment, BOI's variable rates will all remain unchanged. However these were very high to begin with. 

The fixed-rate options for the bank's existing customers also won't change for now. Like many lenders, BOI charges existing customers different rates to brand new customers (and these rates are usually higher). So if you're an existing fixed-rate customer of BOI and you're coming to the end of your current fixed-rate agreement and are considering re-fixing, the rates available to you are unchanged for now. Similarly, if you're a variable-rate customer and you want to move to a fixed rate with BOI, the rates available to you won't change either. 

BOI's tracker customers aren't affected by today's news - but they've already had the 2% increase announced by the ECB passed on to them, as required under their contracts.

Here's a look at some of the new fixed rates from BOI. 

I'm in the middle of applying for a mortgage?

If you're in the middle of applying for a mortgage with Bank of Ireland you still have a bit of time.

Customers who have already been approved for a mortgage have until 9th December to fully draw down their loan and avail of the previous lower rates. Switchers also have until this date to avail of the cheaper rates. However if you draw down your mortgage after 9th December, the new rates will apply.

This one-month notice is similar to the notice period AIB gave its customers when it hiked its rates in October and it comes after Finance Ireland was heavily criticised for initially announcing a rate rise that was due to come into effect within a week.

If you start your application or get approval for a mortgage with BOI after today (10th November) the higher rates will apply regardless of when you draw down your loan.  

What will it cost?

How much the rate change affects you will depend on the size of the loan you're taking out and the term.

However a first-time buyer borrowing €300,000 over 30 years will now pay around €40 extra a month.

Expected news

Today's news was expected given recent moves by the ECB, which has raised rates three times to 2.00% since July in a bid to combat soaring inflation, which is running at 9.2% in Ireland and 10.7% in the Eurozone. 

The main retail banks banks are part able to fund their mortgages through their vast deposit books so are less exposed to rising costs on capital markets. This means they were able to hold off on increasing their rates for longer than their smaller rivals such as Avant Money and Finance Ireland. But it was only a matter of time before they eventually passed on at least some of the ECB increases.  

Unfortunately the ECB is expected to increase rates by another 0.50% to 2.50% in mid December. 

And markets are forecasting that the ECB will hike rates to 3% or 3.25% in early 2023. 

So more rises from BOI and AIB over the coming months are almost a given, unfortunately, and PTSB is likely follow suit with its first increases over the coming days.

What about deposit rates?

Irish savers have been getting a pretty poor deal of late. 

In fact, the interest being paid on deposits in Ireland is the lowest in the Eurozone. 

Unfortunately BOI - as well as the other lenders - haven't passed on any of the ECB rate increases to their savers so far. But it's hoped in time rates for savers will gradually improve. But with inflation running at over 9% in Ireland at present, any money on deposit will still be losing value in real terms.    

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